Let’s face it, purchasing insurance policies is not always at the top of everyone’s shopping list. Most of us look at our premium requests with disdain. The days of friendly local insurance agents are long gone and, without that one-on-one relationship, insurance carriers face a conundrum. How can you influence people to buy your insurance product without that relationship? What can insurers do to attract and retain loyal customers?

Here are five ways that companies can influence customer loyalty: not all of them are created equally.

  1. Positive feelings: You want to create a positive feeling towards a product or service. For an insurer, each customer interaction becomes a moment-of-truth interaction and the insurers can create an impact by providing a consistent, superior customer experience. For example, LEGO responded to a letter from a 7-year old, who had lost the Jay XZ Ninjago LEGO that he bought with his Christmas money, by sending him a replacement. This went viral and resulted in positive press for LEGO and a very loyal customer. Another great example is Berkshire Hathaway travel insurance‘s immediate claims payment processing. Travel customers can report claims via their simple mobile app and claims are paid out instantly. Improving customer experience directly increases customer loyalty and repeat business.
  2. Common beliefs – When customers share common beliefs and values with a company, this motivates loyalty. TOMS shoes matches every pair of shoes purchased with a new pair of shoes for a child in need. This attracts customers who share those same beliefs. Ibuyeco, an Australian insurance company, believes in a clean environment and offers “100% carbon neutral car insurance” by teaming up with Greening Australia, a non-profit environmental group that supports initiatives that offset the carbon emissions. This option attracts loyal, like-minded customers.
  3. REWARDS PROGRAMReward programs – Loyalty programs are a classic example that drives economic commitment. John Hancock has an exclusive partnership with Vitality reward individuals who are health conscious. This unique life insurance program provides the traditional benefits of life insurance plus discounts and rewards for health conscious individuals using fitness tracking devices to track their goals and achievements through a mobile app. Customers receive reward points for meeting health goals that they can redeem at the gym, store or to pay their premiums. Insurers who create a loyalty rewards programs are much more likely to retain their customers over time.

These methods are a great fit for insurance providers to drive engagement. Customers can become committed to a company, product or service, but it does take effort to make this happen. For more information on this topic, we recommend this 2015 study by Rice University.

Two other methods are often used, but we don’t recommend them:

  1. The only game in town – This monopolistic scenario occurs when customers don’t have an alternative. As you can imagine, this is not a great way to earn loyalty. Customers are highly likely switch to another provider when a more appealing alternative appears. This is not a typical or recommended insurance industry scenario.
  2. I’ve always done it this way – These are individuals who choose to buy from the same company out of habit or convenience, irrespective of the quality of a product or service. This is not a high percent. Interestingly, 20% of Europeans would buy insurance from Google, Amazon or Facebook. What does this mean? It means that these technology giants have earned our trust, enough so that we would consider buying new things like insurance or anything else that they may be selling.

Today’s insurers can definitely create and retain loyal customers by providing a superior experience through simplicity and transparency. We encourage you to think beyond core insurance products and services, and explore these concepts as you deploy new programs in your organization. Please share your stories with us. What strategies work in your organization? We’d like to hear from you.

Blog Contributors

Aditi Saraf (187506)

Aditi Saraf works as a Digital Program Lead and business architect for Cognizant’s Insurance Digital SGO team.

Sreenivas Rangamani  (107308)

Sreenivas Rangamani works on Digital Consulting, Program Management and Innovation as a part of Cognizant’s Insurance Digital SGO team.

Chandan Gokhale

Chandan Gokhale

Graduate of Wichita State University, Chandan is a senior director of Digital Transformation services and InsuranceNEXT Labs at Cognizant Technology Solutions.